News — There you are at your favorite department store, looking for the perfect gift for someone on your list. A display catches your eye: "Regular $39.95 " Our Price Only $14.95." Sound like a good deal? Most consumers would say "Yes," according to Dr. Chris Pullig, marketing professor at Baylor University's Hankamer School of Business.
"When retailers advertise an exaggerated reference price ('regular price') consumers tend to believe they are getting a good deal," he said. "They will be less likely to even look at other price information about the product that may be readily available to them, like checking out another store."
Further, Pullig's research shows that if the store also offers a "low price guarantee," consumers are even more apt to feel comfortable about the purchase price without shopping around. A low price guarantee is a promise that the store will match or better the price of a local competitor for the same product. "Either pricing technique can be effective in getting the consumer to make the purchase decision," said Pullig. "But, using both together is a very powerful one-two punch that results in sales for retailers."
Pullig advises that shoppers do their homework, rather than making impulsive purchasing decisions. "The information is readily available," he said. "Go to other stores to compare. Look on the internet. See what other merchants offer before you make your decision to buy."
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